Coming to a computer near you

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by Bill Roller, CFA, CFP® and Christopher Roller

How businesses can counteract the growing hacker threat

Last year, I took over management of my company’s website. Being something of a programmer from a previous life, I had always wanted to run a website. Bravely, I began to convert an old Windows machine to Linux, configuring it as a server and getting it online.

It only took me about five complete installation attempts of formatting, installing and reformatting. A short time later, upon finding a rogue script I realized I had exposed my server to the Internet before it was fully secure.

For over a month, everyday at 4 p.m., a remote computer with an IP address in northeast China attempted to get information to hack my server. The hacker(s) did this by attempting to cause a “page fault,” asking for a page that did not exist in order to get a reply from the server about what system it was running.

Hackers, based in places like Eastern Europe, China or right here in the U.S., are constantly on the look-out for ways to compromise computer systems, from the occasional web-browsing individual user to the small business owner installing new online accounting software.

No matter how big or small the target, the threat posed by hackers will only increase, according to information security analysts. There is even some speculation that the Chinese government itself may have hand in attacks on government, military and commercial interests around the globe.

So we are trapped in a virtual arms race, struggling to secure valuable information from the intruding eyes of an increasingly sophisticated hacking community.

And as computing power becomes more widely available, an increasing number of “zombie” computers, called “botnets,” are being harnessed to attack even the most robust security systems.

This means constant vigilance on the part of IT staff and small business owners to constantly upgrade their information infrastructure to keep ahead of the threat. If you have not upgraded your routers,  firewalls and virus protection software for several years – now might be the time.

Basic precautions for any business should include:

  • Anti virus/firewall protection on every computer and router.
  • Upgrading of routers to the latest level of protection.
  • Closing of unused Internet ports, computers and routers.
  • Daily virus scans.
  • Regular backups of data.
  • Use strong passwords that include lower case and capital letters, numbers and special characters.
  • Consider keeping valuable intellectual property on computers that are not connected to the Internet.
  • Management policies built into routers that prevent access to high risk sites by employees.

Bill Roller, CFA, CFP® is the president of BR Capital, a registered investment advisory firm. Christopher Roller will be a senior at Mountain View High School in the fall.

The “new normal”

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by Bill Roller, CFA, CFP®

Advice for businesses looking to to triumph over uncertainty

We find ourselves living in interesting times. Though the stock market has done surprisingly well over the last eight months and Wall Street has cashed in on its latest bonus round, it’s still unclear what is in store for Main Street.

The markets could be telling us one of two things: that there are better days ahead, or that there is just a lot of cash sloshing  around in stocks. Generally, the stock market serves as a leading indicator. When the market moves strongly upward it’s usually
a signal of an improving economy.

However, we may be in for a more ominous scenario. After last year’s collapse of Lehman Brothers, the U.S. Federal Reserve and other central banks worldwide dramatically increased the money supply to prevent financial collapse.

With the exception of residential mortgages, comparatively little of that money seems to be making its way into the broader economy – exemplified by the difficulty faced by some businesses trying to get or increase their bank lines of credit.

Welcome to the “new normal” – with perhaps five to 10 years of sub-par growth and continuing market volatility. So with that prospect in mind, here are some suggestions for business people looking to weather the storm:

Diversify.

Now that your 401K has partially recovered, make sure that it is diversified among asset classes, (stocks, bonds, and cash) as well as globally. Select an out point for every investment – below which you will not let its value drop.

Get connected.

Network both inside and outside your industry and look for opportunity. Find new ways to tell your story.

Invest in political action.

As business people we tend to ignore politics, but we need to educate the public about who creates jobs (small businesses, not the government) and what are the ideal conditions to create jobs – low taxes and regulation.

Work hard.

Remember, if it’s tough in your industry, chances are it’s tough for many others as well. The strong and hardworking will survive.

Invest in your education.

Find new ways to do things – making the change to a new career, a new industry, or to pursue your dream.

Find innovative ways to market. Then get out and start selling. The last time things were like this was the 1970s, a time of economic uncertainty as well as innovation, from Disco music to microcomputers.

The good news is that hard times – like good times – do not last forever.

Roller is president of Vancouver-based BR Capital Inc., a company providing financial planning and investment advice for individuals, families and business clients.

The coming biometrics revolution

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by Bill Roller, CFA, CFP®

Embracing new technologies designed to identify and protect users

How do you prove to a computer or a website who you are?

The most common method today is to enter a password. But we know that that password could have been stolen and entered by a hacker, identity thief or some other unauthorized person. In the non-virtual world, it’s easy to prove who you are to your spouse or significant other, since they already know you based on their intimate knowledge of your physical characteristics and behaviors. Simply put, biometrics enables computers to recognize its users much as your wife, son or best friend would.

Biometrics is defined as “automated methods for identifying someone based on their physical characteristics or how they act.” Though the technology has been around for decades, biometrics has only recently reached a high profile due to its depiction in sci-fi movies. It’s also increasingly being used by some government agencies.

Biometric methods include the cybernetic equivalents of what a human would use to recognize other humans, including one’s face, handshake and voice. Biometrics also recognizes minute characteristics, including the unique shape of one’s iris and retina, how one walks and even one’s signature. However, digital fingerprints are by far the most common biometric method.

Since the Sept. 11 terrorist attacks, the U.S. government’s interest in biometrics has increased substantially. The U.S. Dept. of Homeland Security has four major programs, including REAL ID, a program designed to improve driver’s licenses and other identifying documents. Biometrics is not yet part of REAL ID, but there are proposals to add it in the future.

Another program, US-VISIT, already requires all visitors to the U.S. to be digitally fingerprinted and photographed, whether they enter by land, sea or air.

Other security programs which may look to biometrics in the future include the Transportation Worker Identification Credential (TWIC) and the Registered Traveler program, administered by the Transportation Safety Administration. This is the program that has been most in the news. Remember those long lines at the airport, with the occasional 80-year-old grandmother pulled aside for inspections by the TSA? Using biometrics, Registered Travelers would have a secure form of identification based on iris scans and fingerprints, allowing them to bypass long lines.

Here in Vancouver, Identity International, Inc. is on the forefront of the biometrics revolution. The company has developed systems for the collection and digitization of fingerprints, as well as access control. Its market continues to grow as governments worldwide implement biometric applications to secure their borders and combat the threat of terrorism.

Remember, as you travel or spend time in public areas, it is not Big Brother that will be watching. Rather it’s a “big information system” that will be keeping you safe.

Bill Roller, CFA, CFP, is the president of BR Capital, Inc., a registered investment advisory firm based in Vancouver

Following the herd hurts economy, experts say

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Listening to others’ fears can obscure not-so-gloomy facts

By Julia Anderson, The Columbian

Clark County’s economy and that of the nation will recover from today’s financial meltdown when people give up the herd mentality that has us galloping off a cliff.

That was the general thinking of four experts speaking at a noontime forum hosted by the Vancouver Rotary Club on Wednesday.

“Unfortunately people can make bad decisions based on what they hear and feel,” Uchila Umesh, a Washington State University Vancouver marketing professor, told the group of about 170 at the Red Lion at the Quay. “Right now we’re dealing with a stampede. The wildebeests can’t see into the distance and instead take their cues from those around them.”

The reality, said Umesh, is that houses are being sold, roads are being built, life expectancy is going up and most people are working.

“And if we look at the long-term trends, the economy is only down a little bit,” he said.

Umesh was joined by Deborah Oester, a mortgage banker with Bank of Clark County, Parker Cann, president of Columbia Credit Union, and Bill Roller, owner of BR Mortgage, a Vancouver financing company.

While the group spent some time looking back at how the financial meltdown got started and gathered steam, Roller suggested that there are similarities between the current situation and prior events, such as the savings and loan crisis of the 1980s.

“People start trusting the RSGs (Really Smart Guys),” Roller said. “But when you attempt to reach too far for yield, you can fall short.”

Financial outlook

Cann said many in the financial industry are still waiting to see how the federal government’s bailout plan will unfold.

“The bottom line result of all this will likely be more regulation of mortgage lending and the investment business, along with more bank examinations and more risk management,” Cann said. “The consumer could end up suffering because of a consolidation in the banking industry and a tightening of regulations that could raise costs and slow lending.”

His biggest concern is how the government can be an investor in banks that it must then turn around and regulate.

“How this will affect competitiveness in the industry is not clear,” he said.

Cann said there’s reason for optimism and sees the local and national economies “working through the situation.”

Housing

Oester emphasized that Clark County lenders are still making mortgage loans to those with jobs and a good credit score.

“For lenders, it’s really back to basics,” Oester said. “At the peak of the housing bubble, houses were sold to buyers who did not intend to live in them or even rent them. Once we clean out and purge this excess inventory, the housing market will settle down. We’ve just got to remember all the positives about our region,” she said. “We’ve lost sight of that.”

And that’s the problem, Umesh said.

“Individual investors, government officials and financial leaders must make decisions based on accurate information,” he said. “Dissemination of solid information would go a long way to solve this problem.”

Americans, he said, seem to be overly critical of what they see today. But people sometimes want the bad news even if the news is not bad.

“For instance, crime statistics show that crime rates are down, but crime reporting and crime shows are up because that’s what people want,” Umesh said.

The professor sees the national economy coming out of the downturn faster than some might expect, with stock markets already having incorporated the expected economic slump into share prices.

“There may be more bad news we don’t know about, but we need to be careful about this gloom and doom, just like we need to be careful about being too euphoric.”

Northwest faring better financially

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by Charity Thompson, Vancouver Business Journal, Interview of Bill Roller, CFA, CFP®

This company is going to do very well this year. We’re reasonably new and looking to add more advisers.

The Northwest looks better compared to places like Detroit or the Midwest where there has been a huge decline in manufacturing. Southwest Washington has a different kind of economy.

We’re seeing more interest rate volatility than usual. Rates have decreased, but there is concern about inflation on things like 30-year mortgages. Part of the problem is that during the ’90s, the United States got used to a very high rate of growth and we’ve been lulled into it. Since the ’80s, the recessions have been getting shallower because of the Fed, so we haven’t seen a real dramatic downturn since then.

But it is not going to be sweetness and light all the time.

The time to be alarmed is when things are going so well, stock brokers and real estate agents are treated like heroes. Now is not the time to be alarmed – now is the time to look for assets that are undervalued.